The Pakistan Stock Exchange (PSX) saw renewed investor confidence on Tuesday as the benchmark KSE-100 Index rallied sharply, posting a gain of nearly 650 points during intraday trading. By 11:40am, the index stood at 122,870.73, reflecting a rise of 645.38 points or 0.53%.
This notable rebound was supported by buying across key sectors including automobile assemblers, cement, commercial banks, oil and gas exploration companies, oil marketing companies (OMCs), power generation firms, and the refinery segment. Index-heavy stocks such as HUBCO, ARL, PSO, SNGPL, MARI, POL, and PPL contributed significantly to the upward momentum, showing renewed market interest in core industrial and energy segments.
The surge in equities followed a highly anticipated announcement from the Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP), which decided to hold the policy rate steady at 11%. The MPC’s move matched market expectations and provided a measure of stability to investors looking for direction amid global economic uncertainty.
According to the MPC, the slight uptick in year-on-year inflation for May to 3.5% was within anticipated levels. More importantly, core inflation experienced a marginal decline, reinforcing the committee’s view that the current monetary stance remains appropriate. The central bank’s decision to maintain the status quo on interest rates offered a degree of predictability for investors navigating an otherwise volatile economic environment.
The previous session on Monday closed on a more neutral note, with the KSE-100 Index gaining a modest 81.79 points, or 0.07%, to settle at 122,225.36. Market activity was marked by a delicate balance between bullish and bearish forces, highlighting investor indecision.
On the global front, markets were influenced by escalating geopolitical tensions in the Middle East. U.S. President Donald Trump’s call for an immediate evacuation of Tehran amid intensifying Israel-Iran hostilities added to investor anxiety. Reports suggested Trump had summoned his national security council to the situation room, shortening his participation at the G7 summit in Canada, further amplifying market concerns.
These developments triggered risk-off sentiment globally, with S&P 500 futures falling 0.46% and European futures down by 0.69%. Oil prices briefly spiked over 2% before retracing slightly after sources revealed that Iran had reached out for a Trump-mediated ceasefire with Israel.
The ongoing air conflict between Israel and Iran saw significant escalations, including reported strikes on Iran’s state broadcaster and nuclear facilities. This backdrop pushed investors towards traditional safe-haven assets. Gold climbed 0.5%, while U.S. Treasury yields dropped across the curve, with the benchmark 10-year yield down about 2 basis points at 4.43%.
Meanwhile, the U.S. dollar strengthened against major currencies such as the euro, yen, and sterling, underscoring its role as a safe haven during periods of geopolitical stress. In Asian markets, MSCI’s Asia-Pacific index outside Japan was slightly up, and futures tied to Hong Kong’s Hang Seng index showed marginal gains.
Overall, despite a backdrop of regional uncertainty and global market unease, the PSX demonstrated strong domestic resilience on the back of sector-specific buying and a stable monetary policy environment, suggesting a cautiously optimistic investor outlook in the near term.